Business & Economy

ECB rolls out stimulus package to offset coronavirus damage

Frankfurt, Germany, Mar 12 (efe-epa).- The European Central Bank has unveiled a range of stimulus measures to offset the economic damage caused by the spread of the deadly coronavirus.

At a press conference in Frankfurt following a meeting of the Supervisory Board, ECB President Christine Lagarde unveiled a “comprehensive package” as part of the bank’s response to the crisis and to “support households and firms in the face of the current economic disruption.”

The ECB rolled out a series of measures to guarantee that its “directly supervised banks can continue to fulfil their role in funding the real economy” as the damaging economic effects of the virus become known, a press release said.

The bank said it would buy 120 billion euro ($134 billion) worth of bonds by the end of 2020, in addition to its commitment to a monthly purchase of 20 billion euro.

It also advised that it would introduce a programme of low-cost loans for banks, encouraging them to maintain lending policies to small and medium-size businesses.

“The coronavirus is proving to be a significant shock to our economies,” said Andrea Enria, Chair of the ECB Supervisory Board. “Banks need to be in a position to continue financing households and corporates experiencing temporary difficulties.

“The supervisory measures agreed today aim to support banks in serving the economy”.

The ECB said that capital and liquidity buffers have been designed to allow banks to stand firm in as stressed a situation as the one Europe currently faces. “The European banking sector has built up a significant amount of these buffers,” the bank added.

European banks should use the benefits provided by the ECB measures to prop up the economy, the statement said.

Global markets have been tumbling in recent days, and Monday saw the worst fall since 2008.

The Bank of England slashed its rates on Wednesday, following the US Federal Reserve’s own emergency rates cut last week.

But the ECB did not follow suit, keeping its record-low levels of minus 0.5 percent.

Lagarde urged fiscal authorities and governments to “work together” to tackle the “significant impact” the crisis will have in the eurozone and global economies.

The virus, which causes the disease COVID-19, originated in the central Chinese city of Wuhan in December, and has since spread around the globe, killing over 4,700 people and infecting more than 127,000.

To contain its spread, China placed entire cities on lockdown, with Italy rolling out similar measures this week.

Italian prime minister Giuseppe Conte on Wednesday night announced the closure of all non-essential businesses, except mainly pharmacies and supermarkets, to contain the outbreak that has infected 12,462 people and killed 827 in the country. Italy is the worst affected nation outside of China.

On Wednesday, the World Health organisation upgraded the outbreak to a pandemic, after the virus had reached 114 countries worldwide.

Only 81 countries have not reported any cases, and 57 nations have seen 10 cases or less.

At a press conference in Geneva, WHO chief Tedros Adhanom Ghebreyesus said widespread and coordinated efforts were needed to tackle the crisis which he said “will touch every sector”, adding that “this is not just a public health crisis”.

“Every sector and every individual must be involved in the fight,” he warned. EFE-EPA

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